Sierra Leone

Overview

Sierra Leone is endowed with rich natural resources. The mining industry is dominated by large-scale producers of iron ore, diamonds, rutile, and bauxite as well as small-scale and artisanal mining of gold and diamonds. The country possesses one of the largest rutile reserves in the world. Mining is significant to the economy of Sierra Leone. Mineral exports contributed about 2.7% to the national GDP and accounts for 91.1% of total exports in 2016.

Sierra Leone’s upstream oil and gas sector is currently in the exploration stage. In the past decade, interest in oil and gas has been high resulting from the announcement of a discovery of commercial hydrocarbons. This has thus sparked off interest among several global oil producers. In recent years, exploration activity has been on the decline but the Petroleum Directorate has intensified its investment drive in 2018.

Prudent management of natural resources is a pillar of the national Agenda for Prosperity and there is strong commitment to align the EITI with these reforms. The president of Sierra Leone, his excellency Julius Maada Bio has made strong commitment in using the EITI as a tool to bring reforms that will attract much-needed investment in Sierra Leone.

Licenses

The National Minerals Agency is the principal point of contact for the general public in all matters to do with mineral rights.The types of licenses issued include reconnaissance license, exploration license, small-scale mining license and large-scale mining license.

Sierra Leone has one of the best web-based cadastre systems in West Africa. The Mining Cadastre Administration System (MCAS) provides information on license holders, coordinates, application dates, and duration of licence in support of the NMA in the management of mineral rights. In addition to the MCAS, an online repository also provides information on (license) payments made during the year.

Beneficial ownership disclosure

Transparency in ownership of extractive assets and rights help by PEPs

Prevent corruption and illicit financial flows to help maximise revenues from extractives

In 2017, SLEITI with support from Herbert Smith Freehills (HSF) conducted a report that would review the legal framework, and prepare recommendations for Beneficial Ownership Disclosure reform.

Progress on implementing beneficial ownership disclosure

Sierra Leone is collecting beneficial ownership information from the 20 largest extractive taxpayers. In addition, steps are being taken to support and improving the due diligence procedures employed by the National Minerals Agency and the Petroleum Directorate in order to make these government agencies better informed in their dealings with prospective commercial partners, and better equipped to lead to the systematic collection and recording of beneficial ownership data.

Sierra Leone EITI is holding a series of technical workshops to review current legal and institutional framework for beneficial ownership and build the capacity of relevant stakeholders for the implementation of beneficial ownership. Read Sierra Leone's beneficial ownership roadmap below for more information.

Becoming EITI compliant is one of the ways of ensuring greater transparency and improved governance of the sector.We are proud to engage with the EITI process that requires reporting on revenue streams from the extractives sector.
The tremendous efforts that have been made by everyone in the production of this [SLEITI] report reflect our shared aspirations for transparency and accountability of the extractives sector, economic growth in Sierra Leone and prosperity for all Sierra Leoneans.

HE Dr Ernest Bai Koroma, The Former President of Sierra Leone

Production

Iron-ore production remains the key contributor to Sierra Leone‘s GDP growth. In 2016, 6,175,958 WMT was produced with a production value of just over 170 million USD. Gold is mostly mined artisanally and presently production comes from alluvial deposits. Diamond is also been mined mainly from alluvial deposits at the Bo, the Kenema, and the Kono districts. Diamond production increased from 299 thousand carats in 2015 to 303 thousand carats in 2016. The total value of mineral exports increased by 31 percent in 2016 to 471 million USD from 358 million USD in 2015. Total mineral exports accounted for about 91 percent of total exports in 2016 compared to 95 percent in 2015.

The upstream oil and gas activity is in the exploration phase occurring off shore and parceled into 14 blocks.

Mineral production (tonnes)

Initializing chart.

In any of these [contract] negotiations, there is such an asymmetry in terms of capacity of negotiation … the EITI is an important step and should be recognised.

Jeremy Allouche, Institute of Development Studies

Revenue collection

The 2016 report shows that Sierra Leone received just over USD 26 million in revenue from its extractive industry operations. 100% of these revenues came from the mining sector.The oil and gas sector was not active in the fiscal year 2015/2016. Revenues were mainly collected through mineral royalties and mining licences.

Initializing chart.

Reconciled revenues by top 5 companies

Revenue allocation

The National Revenue Authority (NRA) is mandated to collection all taxes on mining. In addition, other payments from the mining sector are made to local councils and Chiefdoms, where mining companies are based, to the Ministry of Mines and Mineral Development. In the case of petroleum revenues, payments are made to the Petroleum Directorate (PD).

Funds paid to the NRA and the PD are subsequently transferred to the Consolidated Fund/Treasury, and thereby lose their identity in the National Budget. Moreover, the budget does not show expenditure by geographical locations but rather by line ministry, which means it is difficult to track where money is actually spent on host mining communities. However, specific contributions, such as surface rent by mining companies, are allocated to certain district councils and chiefdoms for social development.

Innovations

The EITI encourages multi-stakeholder groups to explore innovative approaches to make the EITI more relevant and useful.

Through its Online Repository Sierra Leone has made revenues generated from mining companies accessible to its citizens. It contains all mining licenses and payments, published directly from the mining licensing system at the National Minerals Agency. This portal also includes data on licenses issued by the Forestry Department. It was launched in January 2012 and adopted by SLEITI in early 2014.

The Minerals Cadastre Administration System (MCAS) hosts fiscal information for all the large-scale mining companies. All fiscal terms in MCAS are copied directly from the companies’ Mining Lease Agreements. Information on companies’ shareholding structures is also available in MCAS.

The communications team at SLEITI worked with a group of blind people to produce the ‘SLEITI Song’.

Implementation

Sierra Leone achieved EITI Compliance under the old EITI Rules in 2014. The MSG has recently been focused on making a greater contribution to an informed debate about resource governance. An assessment of the activities to make the best use of the EITI Standard and an initial assessment of Beneficial Ownership have been conducted. Through its Online Repository, hosted by the Revenue Development Foundation, Sierra Leone has made revenues generated from mining companies accessible to its citizens.

Governance

In 2011, an MOU was signed between the Government of Sierra Leone, civil society, and the extractive industries to implement the EITI. These three form the Multi-Stakeholders Group and are responsible for developing policies in line with SLEITI's Mandate. The SLETI Secretariat is responsible for coordinating the day-to-day operations of the SLEITI and ensure that the decisions made by the MSG are implemented. The National Coordinator is Head of Secretariat and serves as Secretary to the MSG.

The Multi-Stakeholder Group is working towards the development of a SLEITI Policy and enactment of the SLEITI Bill which aims to remove legal barriers to implementation.

Timeline

Validation

Sierra Leone's Validation against the Standard was to commence on 1 July 2018, however, Sierra Leone requested for an extension on 30 June 2018. The Board decided on 4 September that Sierra Leone is ineligible for a commencement of Validation extension under Requirement 8.5 of the EITI Standard. Validation began 4 September taking into account progress made up to 4 September 2018. A country visit took place on 5 to 9 November 2018. All meetings took place in Freetown, Sierra Leone.

EITI Reports and other key documents

This presentation is the SLEITI 2016 report, which reconciled payments made by the extractive companies and revenues received by the government of Sierra Leone in 2016.

The report also covers the overview of the mining/oil and gas sectors in Sierra Leone, registers of licences; exploration, production and exports in the extractive sector; beneficial ownership; contract transparency; state participation in the extractive sector; revenue collection and allocation; social and economic spending; and the outcomes and impact of the EITI in Sierra Leone.

This report is the 2015 SLEITI report, which reconciled payments made by the extractive companies and revenues received by the government of Sierra Leone in 2015.The report also covers the mining/oil and gas sectors in Sierra Leone as well as registers of licences; exploration, production and exports; beneficial ownership; contract transparency; state participation in the extractive sector; revenue collection and allocation; social and economic spending; and the outcomes and impact of the EITI in Sierra Leone.

This is the Sierra Leone EITI 2016 Annual Progress Report (in accordance with Requirements 7.4. and 8.4.) The report assesses progress made by the country against the EITI requirements, and reviews the outcomes and impact of EITI implementation on natural resource governance.